An article in The Age newspaper in Melbourne (“Cheaper areas escape big cuts”) talks about the 10 per cent drop in the median house price in Victoria’s capital, and the relative stability in properties priced under $350,000. But what got my attention was this little statement:
“( Eastern suburbs agent Peter Bennison) said the number of properties for sale had fallen since last year, and marketing tactics were changing.
“Advertising schedules and budgets will shrink … there’s going to be a lot of private sales going on, off-market selling and sales before auction.“
Image source: Matt Callow at Flickr
That’s going to mean a big change for a lot of agents.
How will agents market their properties when they have less to play with?
Agents traditionally spend a lot of money on newspaper advertising, which is one of the most expensive marketing tools available. I’ve suggested previously that newspaper advertising is on the way out, and I just wonder if the pressure to reduce advertising budgets might expedite that.
Will there be less auctions, because of the cost of doing them, or more auctions, because an auction may be the only way to find out what buyers will pay for a particular home in such a difficult market?
I think that issue will vary with each real estate agent. Some agents only sell by auction, and they’ll continue to push those, together with the associated high marketing costs. Although this could lead to a drop in the number of people who choose to go with these particular agents.
Given that agents need to advertise somewhere, will we see a rise in the amount of money spent advertising online?
To me, that makes a whole lot of sense. The internet offers the widest possible distribution, it’s relatively cheap, and it’s where 87% of buyers are house hunting.
As a real estate agent myself, I realised pretty quickly when I first entered the industry a decade ago, what most suspect. The agents throw massive amounts of silly money at advertising to publicise their wares not their properties.
Truthful agents would admit that newspaper advertising is completely inefficient. Why then would agents continue to use such a wasteful medium with such apoor return on investment? Well of course they realise that the agent with the most listings ( in the paper ) will secure most of the new listings as well. Its purely a listing tool for their own business with the two bonuses
1
Bonus one is that the public pays for it and bonus two is that it occassionally leads to sales. Oh and there’s even a third bonus in that if the phone rings about any given property they can move that enquiry around onto any house they have listed.
Not bad work if you can get it. How many other businesses get their customers to pay for their ads?
In their defence, I don’t think most agents would agree that newspaper advertising is completely inefficient. They see it as an easy way to get a bunch of their properties in front of potential buyers. Also, a person who isn’t actively looking to buy a new home may be glancing through the real estate section of their local paper and see a property that they love, and then choose to act on that. However, if it was only online then they may have missed it.
But, and this is a biggie, the newspapers are less informative than online tools, they heavily promote the agent so the agent can have a vested interest in promoting newspaper advertising, and finally, the agent gets the homeowner to pay for it. And it can be massively expensive to run a big newspaper marketing campaign. For the purpose of this blog post, this issue of cost is a big one. If newspaper advertising costs so much, then surely it’ll be the first to go as real estate marketing budgets shrink.
There is an old saying – “you cannot sell a secret”.
I think the biggest problem is that the newspapers are almost a monopoly and can virtually charge what they like.
The costliest advertisement is the one which doesn’t sell.